Most people invoke the "states' rights" platitude when the federal government oversteps on constitutional matters that haven't been specifically legislated. In this case, Congress already passed a law regulating these activities, and it seems pretty clear-cut that Kalshi engages in interstate commerce, so New York will likely lose if this gets to the Supreme Court.

That's not to say I think event prediction markets are good. In fact, I think they should be banned. That doesn't change my analysis of the current situation.